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Reviews and MoreTue, 31 Mar 2015 20:31:38 +0000en-UShourly1http://wordpress.org/?v=4.0Best Cities for Young Families in Michiganhttp://feedproxy.google.com/~r/NerdwalletCreditCardWatch/~3/5SWviyPwCWI/
http://www.nerdwallet.com/blog/cities/best-cities-young-families-michigan/#commentsTue, 31 Mar 2015 19:45:23 +0000http://www.nerdwallet.com/blog/?p=101929It can be argued that Michigan was among the states hit the hardest by the economic downturn. Detroit’s automobile companies were at the center of U.S. industry for the first half of the 20th century. In 1950, Detroit’s population peaked at 1.8 million, and since then, has slowly declined to 688,000.

The culmination of this decline was the $79 billion in loans and capital to help save the auto industry as part of TARP, which former President George W. Bush signed into law in October 2008. Michigan’s unemployment rate, the highest in the U.S. during the Great Recession, peaked at 14.2% in August 2009.

Motor City reboot

Now, the city’s leaders and residents are making a serious effort to revitalize Motor City. Billionaire Dan Gilbert has invested over $1 billion in the downtown in the hopes of turning the city into a magnet for startups and tech talent — the “Silicon Valley of the Midwest.”

Diversifying the local economy is critical to Detroit’s long-term success, but the auto industry still drives growth, and carmakers are expecting their best sales since 2001, according to the Financial Times. By November 2014, Michigan had closed the unemployment gap, and the state’s jobless rate of 6.7% was less than 1% above the national rate.

The passion and optimism running through Detroit are also again spreading through the rest of the state as jobs, capital and confidence are flowing into the Great Lake State.

NerdWallet found the communities in Michigan that offer young families the best combination of solid schools, great neighbors and affordable housing. Here’s our second analysis of 173 cities, towns and census-designated places in Michigan.

Key takeaways

Small towns dominate. The average population of the top 10 is 9,086, but that doesn’t mean opportunity is absent — many of these small towns are closely linked, both geographically and economically, with Michigan’s larger cities.

Expensive and affordable. The average median home value in the top 10 cities is $152,520, which is higher than the statewide median home value of $103,500. However, homes in Michigan are below the national median of $176,700, which means that even the more expensive cities are still affordable.

Wide geographic footprint. From St. Joseph in the west, to Lambertville in the east and all the way up to Iron Mountain and Ishpeming in the Upper Peninsula, the top 10 cities are widely spread across the state. Young families in Michigan will find a variety of good places to live.

NerdWallet’s analysis

Home affordability. We looked at median home value and selected monthly homeowner costs to prioritize affordable communities.

Prosperity and growth. Looking at current and past family incomes, we calculated the income of residents, as well as the projected long-term growth of each city.

Quality of education. We looked at ratings at the popular site GreatSchools.org to find the best schools.

Family friendliness. This year, we added a new component to our methodology — the percentage of families with school-age children and the poverty rate for young children. This measure helps determine if an area is not only affordable for families, but also a healthy one for children.

Want to know about future NerdWallet studies first? Click here to have updates sent to your inbox.

NerdWallet crunched the data for 173 places in Michigan — cities, towns and census-designated places. Only places with over 5,000 residents were analyzed. To see the full data set, click here.

Best cities for young families in Michigan

1. Freeland

Freeland may be one of the smallest places in the top 10, but it makes a big impact as one of the most family-centric communities in the state. The town has the largest proportion, 37%, of married family households with children in the state. A series of annual events fill the calendars for young families, including the Walleye Festival, which features a fishing tournament, 5K and 10K races and the popular Walleye Parade, and Arts in the Park that highlights the work of local artists in a setting with wine and cheese tasting.

2. Lambertville

Lambertville may be tucked in the extreme southeast corner of Michigan, but it isn’t forgotten among young families looking for a place to settle: the proportion of households with children is among the highest in the state. Lambertville is also close to many of the best amenities in Toledo, Ann Arbor and Detroit. Whether you crave a quiet afternoon hiking through Indian Creek Park or watching the Toledo Mud Hens, Lambertville offers many of the conveniences of a small town, but with access to big city amenities.

3. Byron Center

Even though it is in the middle of Michigan’s western population centers — Grand Rapids and Kalamazoo — Byron Center strives to maintain its own unique culture and tradition, and 2015 will bring the 79th edition of the annual Byron Days Festival. Nearby Kent Trails, a converted rail right of way with 15 miles of paths for biking, jogging and skating, is perfect for burning off that sundae from Houseman’s Ice Cream in downtown Byron Center.

4. Huntington Woods

Huntington Woods may have the highest median income in the state of Michigan, and expensive housing, but the cost of living pays dividends for young families settling in this suburban Detroit city. It has an excellent elementary school, which received a GreatSchools rating of 9 out of 10, and 80% of residents 25 and older have at least a bachelor’s degree — more than triple the statewide rate. Residents have made a long-term investment in Huntington Woods with a homeownership rate of 94.5%, which is 20% higher than the statewide figure.

5. New Baltimore

New Baltimore may have a downtown set on Anchor Bay and a recent record of strong economic growth, but the most striking quality of the town is its level of community involvement. Bay-Rama, a local volunteer organization, not only puts on the Fishfly Festival, New Baltimore’s largest annual event, but it also raises money for a number of investments in the community, from renovating parks to a scholarship fund for local graduates, the group is devoted to the long-term success of its residents.

6. St. Joseph

St. Joseph bills itself as the “Riviera of the Midwest,” and its stunning location on Lake Michigan draws vacationing residents from across the region. The downtown features art galleries, bed and breakfast accommodations and cafes, and it is only a short walk from Silver Beach, one of the top beaches in the country. It is also the only city in the top 10 with a perfect 10 score from GreatSchools, and as an added bonus: median family incomes have more than doubled since 1999.

7. Iron Mountain

Yoopers, rejoice. Iron Mountain has the distinction of being one of two places in the top 10 in the Upper Peninsula — after the U.P. was shut out of NerdWallet’s previous rankings. Downtown Iron Mountain hosts a series of events throughout the year —including Italian Fest and the Downtown Christmas Walk. Even with a closely-knit community and some of the best scenery in the country, Iron Mountain is still one of the most affordable places in the state, with the median home values 35% below the statewide figure.

8. South Lyon

South Lyon has quality schools, earning a GreatSchools score of 8, and median family incomes since 1999 have grown 60%, higher than the top 10 average of 53%. Active families will find plenty to love about the Huron Valley Trail, a paved 25-mile former rail right of way that features family-friendly events throughout the year. The annual pumpkin festival and a summer concert series in the town’s elegant Victorian gazebo are among the most popular draws.

9. Berkley

Even though Berkley is only 17 miles from Detroit, the city defines its own culture and character. The downtown area welcomes walkers and it is full of local small businesses. From morning doughnuts at the Doughnut Cutter to evening cocktails at Amici’s, the neighborhood is a busy one. Residents can expect to allocate about 20% of median monthly income on select homeownership costs — the lowest rate in the top 10.

10. Ishpeming

The second of the U.P. towns, Ishpeming was originally built as a mining town, but it’s now famous for skiing. The ski club that became the U.S. Ski and Snowboard Association began in Ishpeming, and the city is now home to the U.S. National Ski and Snowboard Hall of Fame. This year also marks Ishpeming’s 128th annual Ski Jumping Tournament.

Check out this interactive map of NerdWallet’s top 10 cities for young families in Michigan. Click on an icon to see each place’s overall score.

Best cities for young families in Michigan

Location

GreatSchools rank

Median home value

1999-2013 family income growth

2013 median family income

Percent of families with at least 1 child under age 18

Young families score

1

Freeland

8

$158,400

53.69%

$85,230

36.60%

73.04

2

Lambertville

8

$166,800

20.74%

$75,125

31.70%

67.51

3

Byron Center

9

$185,200

26.29%

$73,889

28.70%

66.61

4

Huntington Woods

9

$250,500

53.29%

$133,490

34.10%

66.58

5

New Baltimore

7

$168,700

52.32%

$92,455

32.90%

66.40

6

St. Joseph

10

$152,500

101.40%

$74,583

13.60%

65.81

7

Iron Mountain

7

$76,000

57.70%

$51,295

18.80%

64.97

8

South Lyon

8

$151,400

60.11%

$85,492

25.60%

64.54

9

Berkley

8

$142,200

50.11%

$86,494

21.70%

64.34

10

Ishpeming

7

$73,500

59.85%

$50,107

18.10%

63.28

11

Saline

9

$187,200

69.26%

$100,511

21.00%

62.96

12

Houghton

9

$127,900

162.04%

$55,515

14.10%

62.94

13

Hudsonville

8

$128,500

36.49%

$64,096

26.40%

62.86

14

Grandville

8

$135,000

35.39%

$64,403

21.40%

62.63

15

Grosse Pointe

9

$242,700

63.55%

$132,656

26.00%

62.50

16

Rockford

8

$145,200

51.40%

$76,550

25.30%

61.85

17

Coldwater

6

$80,300

32.32%

$44,874

22.40%

61.52

18

Grosse Pointe Farms

9

$247,300

24.43%

$124,618

28.30%

61.50

19

Norton Shores

8

$114,500

43.14%

$65,067

18.40%

61.49

20

Grosse Pointe Woods

8

$186,300

33.75%

$105,071

25.40%

61.48

21

Troy

8

$219,200

28.65%

$99,750

29.40%

61.47

22

Temperance

7

$154,300

26.24%

$77,118

25.80%

61.25

23

Allen Park

6

$101,500

38.29%

$71,899

21.10%

61.22

24

Clawson

8

$126,500

42.45%

$72,546

17.60%

60.98

25

East Lansing

8

$177,000

209.55%

$87,347

11.80%

60.95

26

Farmington

8

$155,100

41.84%

$80,057

21.10%

60.88

27

Midland

8

$139,500

46.43%

$70,936

19.60%

60.72

28

Dearborn

6

$103,300

26.04%

$56,164

28.50%

60.62

29

Marysville

6

$120,700

42.50%

$70,253

21.00%

60.03

30

Mason

7

$113,900

59.13%

$66,500

18.30%

60.01

31

Grand Ledge

7

$119,300

36.75%

$64,331

19.90%

59.99

32

Dowagiac

6

$74,000

43.23%

$42,864

18.90%

59.59

33

Beverly Hills

8

$269,400

39.48%

$126,010

29.90%

59.54

34

Rochester

8

$266,800

93.45%

$126,091

24.00%

59.48

35

Rochester Hills

8

$212,700

31.68%

$98,641

25.80%

59.38

36

Novi

8

$235,800

51.10%

$108,666

27.10%

59.18

37

Tecumseh

7

$114,200

39.36%

$64,253

19.20%

59.17

38

Walled Lake

8

$101,100

29.45%

$58,750

16.20%

59.10

39

Grand Blanc

8

$136,500

46.05%

$79,013

18.00%

59.07

40

Holland

7

$117,200

16.39%

$49,221

23.00%

58.94

41

Fraser

6

$113,900

46.21%

$73,601

19.10%

58.84

42

St. Clair Shores

6

$94,600

40.06%

$68,694

16.60%

58.75

43

Flat Rock

6

$99,400

32.42%

$58,377

23.70%

58.66

44

Hastings

6

$96,100

27.91%

$49,928

21.70%

58.40

45

Portage

7

$148,100

45.78%

$72,030

21.70%

58.21

46

Holly

6

$84,400

34.74%

$62,570

21.80%

58.01

47

Sturgis

5

$88,800

31.18%

$44,387

24.30%

57.98

48

Livonia

6

$154,900

31.27%

$82,723

21.50%

57.90

49

Plymouth

8

$195,700

89.19%

$97,500

15.60%

57.75

50

Brighton

9

$163,500

56.64%

$75,027

15.00%

57.69

51

Wixom

8

$179,500

70.68%

$75,645

24.50%

57.63

52

Hillsdale

7

$81,200

27.13%

$44,107

17.30%

57.55

53

Hamtramck

4

$46,600

10.02%

$29,284

28.10%

57.54

54

Wyoming

5

$103,500

27.07%

$54,848

22.00%

57.51

55

Auburn Hills

7

$113,600

20.80%

$62,063

18.40%

57.48

56

Royal Oak

7

$155,700

65.27%

$86,357

14.10%

57.26

57

Milan

6

$124,200

42.14%

$68,952

20.70%

57.23

58

Southgate

6

$88,200

39.18%

$65,311

15.20%

57.17

59

Cadillac

6

$80,200

47.87%

$44,213

16.80%

57.12

60

Wyandotte

5

$87,600

45.61%

$63,692

17.30%

56.62

61

Kingsford

8

$70,900

60.03%

$53,073

10.50%

56.58

62

Alpena

6

$77,500

40.46%

$42,635

14.70%

56.44

63

Davison

7

$94,500

37.73%

$51,625

15.60%

56.39

64

Escanaba

7

$82,500

56.98%

$45,721

13.00%

56.24

65

Howell

7

$119,800

31.53%

$57,817

18.30%

56.18

66

Grand Haven

8

$117,700

30.55%

$52,639

12.40%

56.16

67

Marshall

8

$110,800

36.56%

$56,225

13.40%

56.08

68

Manistee

5

$91,500

54.24%

$46,813

15.20%

56.04

69

Zeeland

7

$125,300

11.39%

$50,804

14.50%

55.93

70

Trenton

7

$118,300

44.37%

$71,556

16.80%

55.72

71

Allegan

5

$83,900

20.61%

$47,688

14.10%

55.61

72

Battle Creek

6

$84,400

37.26%

$48,716

16.10%

55.59

73

Northville

8

$238,300

33.15%

$111,797

21.80%

55.53

74

Richmond

5

$113,900

48.95%

$64,612

20.00%

55.47

75

Marquette

6

$159,600

112.30%

$63,516

12.30%

55.43

76

Bay City

6

$69,200

50.67%

$45,841

15.40%

55.24

77

Ionia

7

$82,600

-3.87%

$36,808

17.50%

55.18

78

Sterling Heights

6

$144,200

12.47%

$68,035

22.80%

55.11

79

Three Rivers

6

$76,800

38.63%

$45,000

15.00%

54.81

80

Fenton

6

$105,800

11.96%

$53,071

18.80%

54.78

81

Farmington Hills

7

$201,200

34.45%

$90,742

20.50%

54.58

82

Swartz Creek

7

$106,300

27.82%

$53,828

17.30%

54.56

83

Burton

4

$74,600

23.12%

$54,234

18.80%

54.41

84

Eaton Rapids

6

$96,400

21.48%

$48,313

19.30%

54.36

85

Roseville

5

$66,100

15.47%

$47,597

15.40%

54.34

86

Grosse Pointe Park

7

$253,700

43.23%

$115,282

27.30%

54.33

87

Garden City

3

$83,100

23.93%

$64,249

19.90%

54.32

88

Niles

6

$78,700

31.03%

$40,893

13.40%

54.04

89

Okemos

6

$193,300

63.91%

$102,954

21.20%

53.75

90

Ann Arbor

8

$230,700

98.77%

$92,030

14.40%

53.70

91

Grand Rapids

6

$109,400

27.52%

$47,468

15.10%

53.45

92

Riverview

7

$117,200

25.44%

$59,740

15.80%

53.41

93

Traverse City

7

$168,900

59.84%

$59,667

15.00%

53.32

94

Flushing

7

$112,200

31.64%

$71,100

15.80%

53.32

95

Hazel Park

5

$54,700

9.10%

$40,417

14.80%

53.15

96

Big Rapids

6

$87,700

111.48%

$42,703

13.00%

53.13

97

St. Johns

5

$119,200

11.73%

$46,607

17.90%

53.03

98

Ironwood

7

$52,300

75.52%

$41,250

10.00%

52.80

99

Oak Park

5

$82,200

14.33%

$55,677

17.00%

52.77

100

Charlotte

6

$111,000

25.34%

$46,968

17.90%

52.73

101

Owosso

5

$81,700

22.53%

$39,915

16.10%

52.72

102

Lincoln Park

4

$62,500

14.62%

$48,732

17.00%

52.71

103

Dearborn Heights

4

$85,600

6.79%

$51,498

21.60%

52.49

104

Belding

4

$82,200

45.31%

$47,775

14.90%

52.41

105

Romulus

5

$73,100

14.63%

$51,683

16.20%

52.00

106

Warren

4

$89,500

20.43%

$53,742

17.70%

51.88

107

Menominee

5

$76,500

49.96%

$45,771

10.30%

51.85

108

Madison Heights

5

$84,200

12.22%

$47,500

17.00%

51.84

109

Mount Pleasant

6

$123,400

102.82%

$49,838

10.20%

51.57

110

Melvindale

4

$59,000

5.13%

$39,902

13.60%

51.56

111

Birmingham

8

$347,400

58.80%

$128,411

25.20%

51.46

112

Adrian

7

$74,200

13.50%

$38,819

11.40%

50.90

113

Whitmore Lake

5

$116,300

22.38%

$63,033

11.60%

50.86

114

Holt

2

$148,700

65.05%

$73,252

24.40%

50.85

115

Greenville

5

$91,100

19.09%

$36,268

16.50%

50.82

116

Ferndale

5

$93,700

23.64%

$56,417

10.80%

50.68

117

Mount Clemens

5

$76,800

29.70%

$49,101

10.80%

50.61

118

Westland

4

$90,600

18.79%

$55,007

14.70%

50.51

119

Taylor

5

$77,800

10.63%

$47,510

14.30%

50.46

120

Lansing

5

$85,000

23.18%

$42,907

13.10%

50.46

121

Monroe

5

$107,900

23.94%

$51,818

16.20%

49.98

122

Alma

5

$76,500

21.48%

$40,740

12.40%

49.66

123

Jackson

5

$66,900

4.83%

$32,807

14.00%

49.57

124

Springfield

4

$65,400

25.28%

$37,321

10.90%

49.20

125

Petoskey

7

$190,100

70.67%

$57,442

12.90%

48.79

126

Wayne

3

$74,000

7.35%

$49,805

15.80%

48.67

127

Comstock Park

5

$122,600

16.27%

$46,742

15.90%

48.67

128

Kalamazoo

5

$97,600

38.20%

$43,102

11.40%

48.63

129

Harper Woods

3

$68,100

8.69%

$50,831

15.80%

48.55

130

Saginaw

5

$49,200

23.92%

$32,821

9.40%

48.08

131

Ludington

5

$104,100

60.56%

$45,099

12.00%

48.08

132

Eastpointe

3

$62,500

5.31%

$48,716

15.50%

47.80

133

Muskegon

5

$67,500

15.88%

$32,365

10.20%

46.83

134

Lapeer

6

$86,900

3.86%

$36,898

14.40%

46.27

135

Port Huron

4

$81,400

22.16%

$38,268

13.30%

45.99

136

Center Line

3

$65,700

59.85%

$50,636

12.10%

45.06

137

Southfield

4

$108,500

19.67%

$61,992

11.70%

43.98

138

Flint

4

$41,700

4.13%

$29,173

7.50%

43.91

139

Ecorse

3

$50,200

27.72%

$34,667

9.50%

43.75

140

Ypsilanti

5

$123,100

62.11%

$46,380

8.30%

43.06

141

Highland Park

4

$42,200

44.07%

$25,554

3.90%

42.16

142

River Rouge

3

$38,600

-5.28%

$27,671

7.90%

41.61

143

Albion

3

$63,700

16.81%

$35,330

9.50%

41.57

144

Detroit

3

$50,400

7.74%

$31,811

8.00%

41.07

145

Pontiac

2

$61,000

5.77%

$33,007

11.10%

40.22

146

Benton Harbor

2

$49,800

18.09%

$20,632

4.40%

38.74

147

Inkster

2

$55,400

-13.19%

$31,208

7.80%

37.86

The final analysis excluded 26 places because they lacked complete school data.

Methodology

Home affordability. Home affordability, 30% of the total score, was calculated by averaging index scores for median home value and median selected monthly owner costs. The lower the costs, the higher the score.

Growth and prosperity. Growth and prosperity are 20% of the total score. The two metrics involved were growth in family income from 1999 to 2013, and median family income in 2013. Both were weighted equally and positively.

Family friendliness. To measure if an area is a good place for families, which is 30% of our total score, we looked at the percentage of married couples with at least one child under age 18, and the percentage of families in poverty with at least one child under age 5. The percentage of families with at least one child was 70% of the score, while the percentage of families in poverty was 30% of the score.

Educational quality. Using data from GreatSchools, every place was assigned a ranking from 1 to 10 for the quality of schools. Education is 20% of the total score.

A family walks toward Lake Michigan in this image via iStock.

]]>http://www.nerdwallet.com/blog/cities/best-cities-young-families-michigan/feed/0http://www.nerdwallet.com/blog/cities/best-cities-young-families-michigan/Key Tax-Preparation Tips to Cut Stresshttp://feedproxy.google.com/~r/NerdwalletCreditCardWatch/~3/kDcheJPLZO0/
http://www.nerdwallet.com/blog/fi-library/fi-library-taxes/key-taxpreparation-tips-cut-stress/#commentsTue, 31 Mar 2015 17:27:12 +0000http://www.nerdwallet.com/blog/?p=107164Although it comes around every spring, tax season tends to inflict the same headaches year after year. To reduce your stress — and maximize your refund — it’ll help to stay organized and be aware of recent changes to the tax code.

For additional motivation to get on track, keep in mind that the average refund has been about $3,000 in recent years. Even if you don’t expect to get that much back, there are plenty of ways to put a refund to good use. But first, you’ll have to file your returns properly, taking advantage of any deductions you might qualify for. Here’s a look at where to get started.

Compiling the necessary information

For starters, you’ll need your W-2 form listing earnings and tax withholdings, which employers typically send out in January or early February. Be sure to have your Social Security number or taxpayer identification number available, as well as those numbers for any dependents you’ll claim. You’ll also need documentation of any income they may have had.

Affordable Care Act penalty

The 2010 Affordable Care Act ushered in one of the most significant tax law changes in recent years. It stipulates that if you didn’t have health insurance in 2014 and didn’t qualify for an exemption, you may face a penalty. In 2015, taxpayers who lack adequate insurance may be penalized at either 2% of a portion of their income or $325 per adult and $167.50 per child, to a maximum of $975 per family — whichever is higher. Those fees are set to increase in upcoming years, which means it’s a good idea to get insured as soon as possible.

Tax deductions reduce taxable income

Deductions reduce the amount of your income that you have to pay taxes on. Sit down and figure out whether the standard deduction or itemized deductions will work best for you. The former is a set amount that reduces your taxable income depending on your filing status, while the latter lets you list qualified expenses separately, such as mortgage interest and local property taxes. If your itemized deductions add up to more than your standard deduction amount, go with that.

So what kinds of expenses can you deduct? Contributions to eligible organizations and interest on education loans are among the more well-known deductions you can take. Others, such as medical and home office expenses, aren’t as widely used for various reasons. Make sure to look into which of your expenses you can use to reduce your taxable income, which will probably increase your refund. Bear in mind that income limits and expense thresholds may limit these deductions or eliminate them entirely.

If you qualify to contribute to a traditional individual retirement account, or IRA, you may be able to shield up to $5,500 of income from taxes — plus $1,000 more if you’re 50 or over — by putting it in an IRA. You have until April 15 to make deductible contributions for the previous year. Withdrawals are subject to income tax, however.

Also, if you’re in a same-sex marriage, stay alert for further changes in the rules governing your tax status and other financial issues.

The bottom line

Completing your tax returns won’t be much fun, but it’s the first step in claiming a refund. Once you’ve filed your returns, you should expect to get what you’re due within three weeks — or in less than half that time if you ask for the money to be directly deposited to a savings or checking account. Just remember to compile all the essential paperwork before getting started, keeping an eye out for tax credits and changes to the tax code.

]]>http://www.nerdwallet.com/blog/fi-library/fi-library-taxes/key-taxpreparation-tips-cut-stress/feed/0http://www.nerdwallet.com/blog/fi-library/fi-library-taxes/key-taxpreparation-tips-cut-stress/Deconstructing the Franchise Disclosure Documenthttp://feedproxy.google.com/~r/NerdwalletCreditCardWatch/~3/O5xIHlGMwpc/
http://www.nerdwallet.com/blog/small-business/franchise-disclosure-document-guide/#commentsTue, 31 Mar 2015 16:07:24 +0000http://www.nerdwallet.com/blog/?p=107079Whether it’s a Subway restaurant, an H&R Block office or a UPS Store, starting a franchise is an investment opportunity and a chance to dip your feet into entrepreneurship.

A franchise, or chain store, is a business operating under the same model, trademark and brand as a larger company. A franchisee, or individual business owner, purchases a franchise from the franchisor, the larger company. The two parties sign a franchise agreement that lasts for up to 20 years. There will be more than 780,000 franchise establishments in the United States by the end of 2015, up more than 12,000 from 2014, according to the International Franchise Association.

As with starting any business, opening a franchise brings both risks and potential rewards. Franchisees are responsible for the costs of starting the franchise, and they have to give up control of some business decisions to the franchisor. However, unlike those who start a business from scratch, franchisees benefit from knowing that the franchise has a proven business model and an established brand.

Before you purchase a franchise, it’s your responsibility to research potential franchisors to determine the best company to invest in. You can do the bulk of this research by looking at companies’ Franchise Disclosure Documents (FDDs). Each company’s FDD reveals the costs and obligations of being a franchisee for that company and includes details about the company’s management and financial history.

How an FDD can help you

The Federal Trade Commission legally requires all franchisors to give potential franchisees an FDD at least 14 days before the franchise sale. The document includes 23 detailed sections explaining the franchisor history, franchisor responsibilities to the franchisee, costs to the franchisee and franchisee obligations under the franchise agreement. It’s designed to help prospective franchisees weigh the costs and benefits of purchasing a specific franchise.

Before you purchase a franchise, read several franchisors’ FDDs in full, and compare the financial strengths and the costs of operating a franchise under each of the companies. Potential franchisees can request the document prior to 14 days before the franchise sale, and franchisors have to comply if the franchisee is reasonably far along in the purchasing process. Franchisors do not have to make their FDD public.

NerdWallet dissected the FTC Franchise Rule Compliance Guide to help you understand what information each of the 23 sections in the FDD contains. We also talked with Barry Kurtz, a franchise and distribution attorney at Lewitt Hackman in Encino, California, about why each item of the FDD is important to potential franchisees.

Items 1-4: Franchisor history

Item 1: The Franchisor and any parents, predecessors and affiliates. The first section of the FDD includes the name of the franchisor and the franchisor’s business structure, such as a corporation, partnership or limited liability company. It also includes the name and address of any affiliate company, company that controls the franchisor or company the franchisor acquired in the past 10 years.

Item 2: Business Experience. Section 2 of the FDD lists the business experience of the franchisor’s key executives, including directors, major officers and any franchisor employees involved in managing the sales and operation of the company’s franchises.

Item 3: Litigation. Section 3 of the FDD lists lawsuits involving the franchisor, parent company, predecessor, affiliates and the executives from item 2. It includes pending lawsuits, suits the franchisor has filed against other franchisees, prior lawsuits involving franchises and government injunctions.

Item 4: Bankruptcy. Section 4 of the FDD includes bankruptcy histories from the past 10 years of the franchisor, parent company, affiliate companies, franchisor executives and franchisor employees who manage the sale and operation of the company’s franchises.

Why they’re important: Together, items 1-4 paint a picture of the franchisor and who’s responsible for directing and operating it. A series of bankruptcies, for example, could be an indication that a franchisor isn’t a solid company, Kurtz says.

Items 5-7: Costs

Item 5: Initial Fees. Section 5 of the FDD outlines upfront fees the franchisee is required to pay to the franchisor before the franchise opens. It also details how the fees should be paid — in a lump sum or installments — and whether the fees are refundable. The initial fee is known as a franchise fee and covers the franchisee’s right to use the franchisor’s brand, trademark, business model and operating system. The franchise fee amount varies by company, but is typically tens of thousands of dollars.

Item 6: Other Fees. Section 6 of the FDD includes a table that outlines additional fees that the franchisee will be required to pay the franchisor throughout the franchise agreement. These fees include royalty and advertising fees, which are usually charged as a percentage of the franchisee’s weekly or monthly sales.

Item 7: Estimated Initial Investment. Section 7 of the FDD includes a table that outlines the entire estimated cost of starting the franchise to the franchisee, including the initial franchise fee outlined in item 5 and additional costs paid to third parties. Additional costs include rent, utilities, equipment, inventory, signs, an initial advertising fee, training and licenses. The definition of the initial investment period varies by franchisor, but typically it’s at least three months.

Why they’re important: Items 5-7 outline all of the costs you’ll have to pay as a franchisee. Make sure you understand how much money you’ll have to put into the franchise relative to the money you’ll get out of it. One way to be sure is to review these costs with an accountant, Kurtz says.

Item 8: Restrictions on sources of products and services

Section 8 of the FDD describes products the franchisor requires the franchisee to buy and any restrictions the franchisor has about where franchisees can buy necessary supplies and services. Some franchisors require franchisees to buy or lease equipment, inventory, computer hardware, software and real estate directly from the franchisor or from a specific supplier.

Why it’s important: This section lists specific expenditures the franchisee will have to make and how they’ll be required to source those purchases.

Item 9: Franchisee’s obligations

Section 9 of the FDD includes a table that lists the franchisee’s obligations outlined in the FDD and the franchise agreement. Common obligations including site selection and development, fees, compliance with standards, ongoing purchases, maintenance, appearance and remodeling requirements, insurance, advertising, management, records and reports, inspections and audits.

Why it’s important: If you’re not familiar with an FDD, this section is a good place to start, Kurtz says. It acts as a table of contents for the FDD and the franchise agreement, telling you what’s covered and where to find it.

Item 10: Financing

Section 10 of the FDD describes any financing options the franchisor offers, such as an installment contract, lease or loan guarantee. It also outlines the terms of that agreement, including interest rates, finance charges, number of payments and default penalties. However, these terms are not set in stone; the franchisee can negotiate them with the franchisor.

Why it’s important: Starting a franchise is a big investment that you’ll likely need outside funding to finance. Franchisors aren’t required to offer a financing option. If the franchisor doesn’t, you’ll have to find another way to get the money, either through a traditional small business loan or an online lender.

Section 11 of the FDD describes the franchisor’s obligations to the franchisee, which can include site selection, advertising and training. If the franchisee is required to contribute to an advertising fund as described in item 6, this section explains what the money in the fund was used for last year, such as production and media placement.

This section also discusses the computer system or electronic cash register the franchisee is required to use, the cost of purchasing or leasing the system and required upgrades and maintenance. Finally, the section includes a description of the training program the franchisor offers franchisees, including a list of the subjects covered during the training, how many hours the training takes, the cost of the training and who is required to attend.

Why it’s important: This section gives prospective franchisees an expectation of how much support they’ll receive from the franchisor and a clear idea of the day-to-day operations involved in owning a given franchise, Kurtz says.

Item 12: Territory

Section 12 of the FDD states whether the franchisor will offer the franchisee the exclusive right to open a franchise in a given area. It also describes the circumstances in which the franchisor would approve a franchise relocation and any plans the franchisor has to open a competing franchise system.

Why it’s important: Territory rights are important because they protect the franchisee from competition. For example, if a restaurant franchise opens on the corner of 1st and Main, an exclusive territory right could prohibit the franchisor from opening another outlet or franchise within a three-mile radius of that location, Kurtz says.

Items 13-14: Intellectual property

Item 13: Trademarks. Section 13 of the FDD states whether the franchisors’ trademarks are registered with the United States Patent and Trademark Office.

Why they’re important: If a franchisor has a registered trademark, patent or copyright, the franchisee can legally use it, too. If not, the franchisor and franchisee are at risk to be challenged for their use of the intellectual property.

Item 15: Obligation to participate in the actual operation of the franchise business

Section 15 of the FDD states whether the franchisee is required to personally be involved in the franchise’s day-to-day operation, or whether the franchisee can hire a supervisor to manage the franchise location.

Why it’s important: If you’re a franchisee who wants to own the franchise but not manage it, make sure that the franchise agreement allows you to do that.

Item 16: Restrictions on what the franchisee may sell

Section 16 of the FDD lists any restrictions the franchisor has on what goods or services the franchisee can sell.

Why it’s important: As a franchisee, you’ll be responsible for offering the products or services the franchisor approves, so you need to be aware of any restrictions on what your franchise can offer.

Item 17: Renewal, termination, transfers and dispute resolution

Section 17 of the FDD includes a table summarizing the franchise agreement, including terms about renewal, extension and transfers of the agreement. It explains if a renewal means the franchise agreement terms will be extended, or if the terms are subject to change at the time of renewal.

Why it’s important: This section summarizes the franchisee’s rights under the franchise agreement.

Item 18: Public figures

Section 18 of the FDD lists public figures who have control of the franchise system, use their image to endorse the franchise or invest in the franchisor. Public figures include athletes, actors, musicians and other celebrities.

Why it’s important: If you are paying into a franchisor’s advertising fund as a franchisee, you have a right to know how that money is being used.

Item 19: Financial performance representations

In section 19 of the FDD, franchisors are allowed to include either historical or projected representations of how current and past franchises have performed financially. Representations can be a chart, table or mathematical calculation to represent franchise earnings or room occupancy rates for a hotel franchise, but they are not required.

Why it’s important: If the franchisor discloses financial performance of its franchises, prospective franchisees can more easily see how much money they stand to make by buying the franchise.

Item 20: Outlets and franchisee information

Section 20 of the FDD includes five tables showing the number of franchised outlets and other company-owned locations in the past three years. It also includes contact information for current and former franchisees and states whether those franchisees have signed a confidentiality agreement during the last three years. If they have, the prospective franchisee can’t speak with those franchisees about their experience with the franchise system.

Why it’s important: A growing number of franchises shows that the franchise system is thriving, while a shrinking number shows the prospective franchisee that franchises in the system may have struggled. Additionally, if the franchisor doesn’t disclose the financial performance of its franchises in item 19, a prospective franchisee should talk to current and former franchisees and ask about their financial performance. Franchisees don’t have to disclose this information, but they can choose to, Kurtz says.

Item 21: Financial statements

Section 21 of the FDD includes the franchisor’s audited financial statements from the previous three fiscal years, prepared using the U.S. Generally Accepted Auditing Standards. In some cases, this section also incudes financial statements for the parent corporation or affiliate companies.

Why it’s important: This information reflects how successful the franchisor has been in the past and shows how financially secure the franchisor is.

Item 22: Contracts

Section 22 of the FDD includes copies of the franchise agreement, leases, options, financing agreements and purchase agreements.

Why it’s important: If you decide to purchase a franchise, you’ll have to sign these contracts. It’s important to understand the terms of the contracts to know what you will be expected to do as a franchisee.

Item 23: Receipts

The last section of the FDD contains two copies of a receipt for the disclosure document. The franchisee must sign one copy to indicate they received the disclosure document and return it to the franchisor, and keep the other copy for at least three years.

Next steps

When you’re ready to purchase a franchise, meet with a franchise attorney to review the FDD and franchise agreement more thoroughly. Franchise attorneys are specialized in catching details of the FDD you might not notice. You should also have an accountant review the costs sections of the FDD and help you create a 3-5 year projection of your income and expenses, Kurtz says.

]]>http://www.nerdwallet.com/blog/small-business/franchise-disclosure-document-guide/feed/0http://www.nerdwallet.com/blog/small-business/franchise-disclosure-document-guide/Good Credit Is Important for Renting an Apartmenthttp://feedproxy.google.com/~r/NerdwalletCreditCardWatch/~3/QIcvBHUDddk/
http://www.nerdwallet.com/blog/tips/credit-score/good-credit-renting-apartment/#commentsTue, 31 Mar 2015 14:15:14 +0000http://www.nerdwallet.com/blog/?p=106670It’s a common misconception that good credit is only important if you’re planning to take out a loan. The reality is that a solid credit history will enable you to accomplish other financial tasks, too.

For instance, maintaining a positive credit profile will go a long way toward helping you score the apartment rental of your choice. Not sure why? Check out the Nerds’ explanation below.

What it means to have good credit

First, let’s be clear about what it means to have “good” credit. Your credit history is a detailed catalog of information about your past habits with managing borrowed money. This data is contained in your credit report. Examples of positive information that can land on your credit report are on-time bill payments and low balances on your revolving accounts.

The details of your credit report are used to create your credit score. The most commonly used credit scoring algorithm in the United States is produced by the Fair Isaac Corp. FICO scores range from 300 to 850, with a higher score being better.

Banks set their own standards for what constitutes a first-rate FICO score. But in general, a score of 690 or higher is considered “good.” Scores of 720 or higher are typically viewed as “excellent.”

Your credit may impact rental decisions

Prospective homeowners are usually keenly aware of the importance of their credit in obtaining a mortgage. But before taking on a tenant, most property owners want to see a clean track record of on-time bill payments, and they verify this by running a credit check. Many landlords reason that someone who hasn’t made good on financial obligations in the past is unlikely do so when the rent comes due.

Consequently, keeping your credit in good shape will make it much easier to secure the apartment of your choice. This isn’t to say that you can’t work around bad or limited credit when it’s time to score some new digs. But you might have to negotiate a bit with your future landlord, which often includes offering up something tangible to make you a more attractive tenant.

For example, many people have success with offering to provide a larger security deposit or getting references from past landlords or employers. But this is far from an ideal scenario; it’s much better to take steps to get and keep good credit so that your rental application will be accepted without you having to jump through hoops.

How to make your credit sparkle

Creating a good credit history might seem daunting, but it won’t be if you follow the Nerds’ tips below:

Similarly, don’t sign up for too many credit cards at once. Be sure to keep at least six months of time between each application.

The bottom line

Good credit makes the process of finding a new apartment much smoother. Be sure to use the Nerds’ tips to start developing yours today.

Lindsay Konsko is a staff writer covering credit cards and consumer credit for NerdWallet. Follow her on Twitter @lkonsko and on Google+.

Image via iStock.

]]>http://www.nerdwallet.com/blog/tips/credit-score/good-credit-renting-apartment/feed/0http://www.nerdwallet.com/blog/tips/credit-score/good-credit-renting-apartment/Credit Cards 101http://feedproxy.google.com/~r/NerdwalletCreditCardWatch/~3/578aT6dKXp8/
http://www.nerdwallet.com/blog/tips/credit-score/credit-cards-101/#commentsMon, 30 Mar 2015 23:08:15 +0000http://www.nerdwallet.com/blog/?p=106072Quick quiz: What’s the difference between a credit card and a debit card? Why is it important to carry credit? How do credit cards work?

Don’t panic if you don’t know the answers to these questions off the top of your head. The Nerds are here to explain everything you need to know about credit card basics.

What is a credit card?

A credit card is a tool that allows you to use borrowed money to pay for goods and services. It works like this: When you’re approved, the bank hands over a hunk of credit in the form of a plastic card to use at your discretion. In swiping your credit card, you’re not using your money to pay for your groceries or a new outfit. You’re using the bank’s money, which they’ll let you do on a short-term basis without incurring any interest. At the end of the month, you have to pay that mini-loan back in full or finance charges will be assessed.

Debit cards work differently. With this type of plastic, an auto draft from your checking account is occurring when you swipe your card. You’re using your own funds to pay for your items on the spot, so there’s no borrowing involved and no bill to settle at the end of the month.

Prepaid debit cards are similar to debit cards, but with a significant twist. Instead of tapping funds in your checking account, swiping a prepaid debit means drawing on a cash deposit you made onto the card; you’ve essentially paid ahead for your purchases. As with debit cards, you’re not borrowing money from a bank when you use prepaid debit.

Why it’s important to get a credit card

To the untrained eye, it might seem that debit or prepaid debit cards are a smarter way to pay. Since they don’t involve borrowing money, there’s no way to get into debt, right?

That’s right, but using borrowed money responsibly is essential to building your credit profile. Having good credit will make it much easier for you to get loans on good terms in the future. It will also go a long way toward making other financial tasks stress-free. Examples of these tasks include renting an apartment and finding affordable car insurance.

Aside from building credit, using a credit card as your primary form of payment plastic will also help you earn rewards and minimize fees. Usually, debit and prepaid debit don’t offer rewards programs, and prepaid debit cards are notorious for their high (and often opaque) fees.

Tips for effective credit card use

Getting a credit card is only going to help you build good credit if you use it carefully. Here are the Nerds’ top tips for the care and keeping of your card:

Pay off your charges in full every month. Credit card debt is expensive and can drag down your credit score.

Keep the balance on your card below 30% of your available credit at all times during the month. Make a payment if you start approaching that threshold.

Put at least six months of space between credit card applications.

Check your credit card online at least once per week. This will help you track your spending, and could help you spot fraud fast.

The bottom line

Although they look and feel the same, credit cards are very different from debit and prepaid debit cards. Using a credit card responsibly is a great way to build and maintain a healthy credit profile, so be sure to get started as soon as you can.

Lindsay Konsko is a staff writer covering credit cards and consumer credit for NerdWallet. Follow her on Twitter @lkonsko and on Google+.